.

April 11, 1989

Honorable James M. Kuboviak Opinion No.JM-1039 Brazes County Attorney 300East 26th Street Re: Distribution of tax funds Suite 325 remaining after dissolution Bryan, Texas 77803 ofwater control and improvement district, and related questions (RQ-1520)

DearMr. Kuboviak:

You have asked about the right of Brazos County to contract with a water control and improvement district to receive and use the surplus tax funds of the district remaining at the time of its dissolution if the county agrees to carry out certain ofthe district's functions after the dissolution. The water control and improvement district is located wholly within Brazos County.

You explain:

Brazes County Water Control and Improvement District No. 1,Big Creek, (hereinafter "Big Creek") was validated for organization and creation byAct onJune 27, 1959, Chapter 10, 1stC.S., .$l-12, 1959 Tex. Gen. Laws 30, andunder the legislative duties conferred thereby atTex. Const., Art. XVI, 4 59. Several events nowwarrant dissolution of Big Creek. A federal district court order has enjoined Big Creek fromcompleting any further construction of flood control improvements or of carrying out its statutory purposes until it has complied with the applicable provisions of theNational Environmental Policy Act and the Environmental Quality Improvement Act by completing, in association with the Soil Conservation Service, a NEPA study of the water sheds within its boundaries. The district has found that the study and cost of the completion of improvements asnecessitated by that studywould beprohibitive. Prior to this

P. 5385Honorable James M. Kuboviak -Page 2 (JM-1039)

date, Big Creek, because of continuous court proceedings and litigation, has failed to complete the flood control and drainage structures within the ten (10) year time period from itsdate of creation as set forth in 5 51.793 of the Texas Water Code.

The district must now contract with some government entity tomaintain and repair the structures ithas completed, itmust contract topay for such services and then it must dispose of its surplus tax funds upon its dissolution.

. . . .
Ithas been determined by Big Creek, that,
even after contracting with the County, if the districts debts and obligations were satisfied upon its dissolution, including allowances for themaintenance of existing improvements until their retirement, a cash surplus would exist.

We are advised that the Big Creek district has existed for approximately 30years; that it issuedbonds many years ago: that the issued bonds and other obligations have been retired or else previously collected taxmoney is available to retire all outstanding district obligations and anticipated expenses; and that approximately $30,000 will remain after such payments. It isalso ourunderstanding that the only "district functions" to bedischarged following the dissolution of the district will be themaintenance of dams, forwhich Brazos County iswilling to assume responsibility.1

1. The opinion process of this office isdesigned to furnish legal opinions based upon a stated fact situation, and not to resolve factdisputes. A recitation of facts in
an opinion isa not an affirmation of their accuracy, but merely a recital of the isoffered. basis upon which the legal

See senerallv Roteilo v. opinion Brazos Countv -Water Control & Imnrovement Dist. No. 1, 511 S.W.Zd 392 (Tex.Civ. APP. - Houston [lst Dist.], 1974, writ ref'd, n.r.e.) (historical background regarding thedistrict).

p. 5386Honorable James M. Kuboviak -Page 3 (JM-1039)

Title 4 of the Texas Water Code governs districts, including the Big Creek District, created by the authority of article XVI, section 59,of the Texas Constitution. Water Code 5 50.001(l). Theprovisions of the title generally applicable to all such districts are found in chapter 50of the Water Code; those particularly concerning water control and improvement districts are contained in chapter 51 thereof.
Subchapter G of chapter 50 (applicable to all districts) deals generally with the dissolution of inactive districts. Itprovides that, after notice andhearing, the Texas Water Commission may dissolve any district which is inactive for aperiod of five consecutive years andhas no outstanding bonded indebtedness. Water Code 5 50.251. Upon the dissolution ofadistrict by the commission, the assets of the district escheat to the state. Id. 950.257.

Water control and improvement districts may also be voluntarily dissolved pursuant to subchapter Pof chapter 51 of the Code (dealing particularly with water control and improvement districts). Different methods ofdoing so are authorized by subchapter P for several statutorily described situations. Section 51.781 of the Code provides:

(a) If the electors of adistrict reject theproposal to issue construction bonds by a constitutional or statutory majority vote, the board must dissolve the district and liquidate the affairs of the district as provided in Sections 51.781-51.792 of this code.

(b) Subject to theprovisions of Subchapter G of Chapter 50 ofthis code, ifa district finds at any time before the authorization of construction bonds or the final lending of its credit in another form that the proposed undertaking for any reason is impracticable or apparently cannot be successfully andbeneficially accomplished, the board may issue notice ofahearing on proposal todissolve the district.

(c) Subject to theprovisions of Subchapter Gof Chapter 50of this code, if 20 percent of the qualified voters of a district petition theboard forahearing onaproposal todissolve the district anddeposit with theboard an amount estimated to cover the

P. 5387Honorable James M. Kuboviak -Page 4 (JM-1039)

actual cost ofgiving notice andholding the hearing, the board shall publish notice of the hearing within 10days and shall hold the hearing within 40 days after the filing of the petition, as provided in Sections 51.782-51.785 of this code. Ifthe finding isagainst thepetition, the deposit shall be applied to pay the cost ofgiving notice and holding the hearing.

Themechanics of a dissolution effected pursuant to section 51.701 of theWater Code are controlled by sections 51.782 through 51.792. Section 51.791 speaks to the disposition of excess taxes and reads:

(a) Iftaxes have been collected by the dissolved district inexcess of the amount required to liquidate the obligations of the district, the excess shall bepaid ratably to the county treasurer or treasurers of the county or counties inwhich the district was located.
(b) The commissioners courts shall credit themoney received from the dissolved district to the interest and sinking fund for any outstanding county bonds. Ifthe county has no outstanding bonds, the money may be applied as the commissioners court lawfully directs.

However, the situation of the Big Creek district, aswe understand it,does notmeet strictly any of the three circumstances described in section 51.781 because bonds have notbeen rejected byvoters, construction bonds have been authorized, and no voters have petitioned the board for a hearing on aproposal todissolve the district or deposited funds to cover the costs of such ahearing.
Subchapter P also authorizes dissolution in another circumstance. Section 51.793 reads:

Subject to theprovisions of Subchapter G of Chapter 50of this code ifadistrict has notwithin 10years from thedate of its creation commenced and completed the construction of a plant and improvements to carry out thepurposes of its creation in accordance with the plans adopted by the district, theboardmay enter aresolution in

p. 5388Honorable James M. Kuboviak -Page 5 (JM-1039)

itsminutes todissolve the district under the provisions of Sections 51.794-51.828 of this code. After compliance with these provisions, a vote of the electors of the district, and the payment of its valid, enforceable indebtedness, thedistrict may be dissolved.

Themechanics ofdissolution under section 51.793 provisions aremuch more elaborate, time consuming, and costly than are those required when dissolution hiseffected pursuant to section 51.781, but the Big Creek district apparently does meet the section 51.793 condition: ithas not within 10years fromthedate of its creation been able to carry out the purposes of itscreation. The difficulty is that the subsequent sections governing the dissolution of districts under section 51.793 do not specify what is to become of excess taxes after the district isdissolved -- unlike the provision of section 51.791 applicable to section 51.781 dissolutions. Furthermore, the provisions governing dissolutions under section 51.793 appear to assume that outstanding obligations will remain unpaid and unprovided for, and that an election approving additional tax bonds ("dissolution bonds") will be necessary to effect adissolution.2

2. It isafter the issuance, sale ordelivery of needed dissolution bonds that adissolution under section 51.793 is deemed tohave been effected. Section 51.828 states:

(a) On the issuance and sale ordelivery of the dissolution bonds and the appointment and qualification of the trustee, the secretary shall deposit all available existing records of thedistrict inthe office of the county clerk of the county orone of the counties inwhich the district is located.
(b) The district immediately isconsidered dissolved forallpurposes, except that the taxes levied against the taxable property may be enforced in the
name of the district onbehalf of thebondholders by the trustee orhis successors. The surviving board may meet from time to time until the dissolution bonds are paid and discharged and may delegate itspowers and give instructions to the trustee orhis successors as the board sees fitand circumstances warrant. After (Footnote Continued)

P. 5389Honorable James M. Kuboviak -Page 6 (J&1039)

There isathird avenue fordissolution or abolition of water control and improvement districts provided by subchapter P,but it isavailable only to districts located entirely in acounty having a population of less than 11,000 according to the last preceding federal census. See Water Code §51.829. Brazos County, according to the 1980 census, has apopulation ofmore than 90,000, so the third alternative procedure isnot available to it. Cf.Am lin County Water Dist., 432 S.W.2d 520 (Tex. 1968) (eligibility). Of interest, nevertheless, inthe sections describing itsmechanism, is section 51.836, which reads:

Ifa district has outstanding bonds or other indebtedness maturing beyond the current year inwhich the dissolution occurs, the commissioners court of the county in which the district is located shall levy and have assessed and collected, inthe manner prescribed in the Property Tax Code sufficient taxes on all taxable property in the district topay theprincipal ofand interest
on thebonds and other indebtedness when due.

Until 1929, there was noprovision inTexas law for the dissolution ofawater control and improvement district. In that year, the substance of section 51.781 and its related provisions was enacted, and also the alternative procedure available under section 51.829. m Acts 1929, 41st Leg., ch. 87, at 204; ch. 280, at 578. The source law for section 51.793 and the procedure itauthorizes was enacted in 1943.
m Acts 1943, 48th Leg., ch. 328, at 550. That actprovided, inter alia:

Sec. 18. This Act shallbe cumulative of all other provisions of lawproviding for the dissolution ofwater control and improvement districts organized under the provisions of Sections 59-a ofArticle XVI of the Constitution ofTexas, and shall be applicable only to such districts asmay adopt the provisions hereof asprovided
. . . .

We are of the opinion that the intent of the 1943 act regarding amethod fordisposing of excess taxes is implied

(Footnote Continued) the payment of all dissolution bonds, interest, and costs of collection, theboard shall be dissolved.

p. 5390Honorable James M. Kuboviak - Page 7 (JM-1039)

by itsproclamation that itsprovisions are cumulative of all other provisions of lawproviding forthe dissolution of water control and improvement districts. While such a statutory provision does not consolidate laws ind materia, itdoes indicate an intent that they be considered tobe in harmonious co-existence and cooperation. State v. Laredo Ice Co., 73 S.W. 951, 952 (Tex. 1903). The substance of both theprovision now found insection 51.791 that excess taxes be paid to the county treasurer and the provision of section 51.836 that authorizes the county to retire the obligations of adissolved district were already part of the lawproviding for the dissolution of such districts at the time of the 1943 enactment.

Section 51.802 of theWater Code (oneof the sections supplementing the section 51.793 authorization for dissolution) specifically allows theboard of thedistrict to "contract with trustees, engineers, attorneys, and others it considers necessary ordesirable toproperly liquidate and wind up the affairs of the district," andwe believe it may contract with the county to accept andmaintain the district facilities inexchange forthe district's excess tax monies remaining after its dissolution. Indoing so, itwill be conforming to thepolicy of theWater Code as exemplified by section 51.791. See also Water Code 552.501 (dissolution ofunderground water conservation districts): id. 5 66.403 (dissolution of storm control districts). See senerallv Water Code 55 58.781-58.836 (irrigation districts). .Cf. Trimmer v. Carlton, 296 S.W. 1070 (Tex.1927) (& materla, same purpose).

Aside fromwhatever the statutory duty of the county may be upon the dissolution of awater district located within itsboundaries, if, inthe reasonable opinion of the county commissioners court, the proposed contract is supported by adequate consideration flowing to the county, we believe that Brazos Countymay legally contract with Brazos County Water Control and Improvement District No. 1 to continue and carry outdistrict functions after the dissolution of the district and, as consideration therefor, to receive the surplus tax funds of the district upon dissolution of the district. Section 411.002 of the Local Government Code reads:

(a) The commissioners court of a county may contract with a governmental unit, including acounty, municipality, or other political subdivision, to jointly acquire a right-of-way or to jointly construct ormaintain a canal, drain, levee, or other

p. 5391Honorable James M. Kuboviak -Page 8 (JM-1039)

improvement for the purpose of providing flood control or drainage as itrelates to flood control or forthepurpose ofproviding andmaintaining necessary outlets.
(b) The contract may contain any provisions that the governing bodies of the contracting entities consider necessary.
(c) The contracting entities may provide by contract, on mutually agreeable terms, that they shall jointlymaintain the project
or that one of them shallmaintain the project under its exclusive direction and controlwhile the other entity contributes to the expense ofmaintenance.

See also V.T.C.S. art. 4413(32c) (Interlocal Cooperation Act); Wi lac ; 1v. Abendroth, 177 S.W.2d 936 (Tex.1944)(classification of districts). Cf. Attorney General Opinion MW-257 (1980) (related duties of county).

Brazos County may contract with Brazos County Water Control Improvement District No. 1to continue and carry out district functions after the dissolution of the district and to receive the surplus tax funds of the district upon dissolution of the district. 

# (zl$$+

Attorney General of Texas

MARY KELLER First Assistant Attorney General

LOUMCCREARY Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY Special Assistant Attorney General

p. 5392Honorable James.M. Kuboviak -Page 9 (JM-1039)

RICK GILPIN Chairman, Opinion Committee
Prepared by Bruce Youngblood Assistant Attorney General

p. 5393